BRUSSELS – Today, some people are saying that the storm of the financial crisis is subsiding. I am not so sure. Interbank lending rates are slowly coming down, but they are still far higher than they should be, share prices continue to be volatile, and conditions in global markets remain fragile.
More worryingly, we are seeing the effects on the real economy across Europe, in the United States, and now further afield. GDP is contracting. Industrial production is falling at a record-high pace.
So where do we go from here? The answer is that we have to rebuild trust. That is the core challenge for Europe, the European Commission, global leaders, and the financial services industry over the next five years. It will not be easy.
We need healthy financial markets, without which we will not recover. We need to ensure transparency and adequate risk management, measures on which are part of my proposal on capital requirements. We need adequate oversight and crisis management, which is why I am submitting a paper on early intervention and look forward to the analysis of the High Level Group of experts working under Jacques de Larosière, which is due imminently.